FinCEN and Federal Reserve Board Reducing the Bar for International Transactions
The FinCEN and Federal Reserve Board are planning to reduce the threshold for international transfers from $300 to $250. The proposed AML rule will demand the sender and receiver’s information, which is expected to increase the compliance burden on financial institutions for payment processing.
According to the current Bank Secrecy Act in the US, financial and non-financial institutions obtains information of both parties when the transfer is above $3000, both domestic and international transfer. This new change will not impact domestic funds transfer, but the international transfers above $250 will be monitored.
FinCEN and the Federal Reserve have suggested lowering the bar to $250 from $3,000 on international transactions for which sender and receiver details are gathered and transmitted.
— Rachel Smith (@RachelS65786323) October 28, 2020
The authorities published the rule on Tuesday, which also clarified that rule is applicable on transactions including digital currencies if they meet the desired threshold. According to the regulators, reduced denomination resulted in terrorist financing and other illegal activities. The proposal is based on the 2000 suspicious reports filed by FinCEN between 2016 and 2019. These reports were related to terrorist financing. Most of these reports included $509 and $255 transactions.
The banks have to bear with more burden to comply with the new amendment, but it can be beneficial in combating money laundering and terrorist financing. The authorities are waiting for responses from banks and the public until November 27.